Russian anger over fraud allegations
in last week’s elections may swell a demonstration to the
biggest in Moscow since Prime Minister Vladimir Putin rose to
power more than a decade ago.

More than 20,000 people may gather tomorrow in the city
center to demand fair elections, according to Solidarity, the
opposition group organizing the rallies. Authorities today
boosted the maximum size of the protest to 30,000 from 300.

The ruble has dropped for seven days and Russia’s credit
risk has risen the most among emerging markets since the
demonstrations started, threatening to weaken Putin’s bid to
return to the Kremlin in a presidential contest in March. Putin
said yesterday that the protesters had been emboldened by U.S.
Secretary of State Hillary Clinton criticizing the vote.

“People did not expect that their voting rights would be
trampled on in such a rude, cynical and brazen manner,” said
Dmitry Oreshkin, an independent political analyst in Moscow.
“This rally is a signal that the authorities don’t control the
situation. People don’t have other legal means to contest the
election results.”

Ruble, Default Swaps

The ruble fell for a seventh day, its longest losing streak
in almost three years, dropping 0.3 percent to 31.4550 per
dollar by the close in Moscow. The Micex Index (INDEXCF) of 30 stocks fell
4.1 percent to 1,396.28, the lowest close since Nov. 24. OAO GMK
Norilsk Nickel, Russia’s largest miner, fell 5.6 percent. OAO
Sberbank, the biggest lender, declined 4.1 percent. The dollar-
denominated RTS Index tumbled 4.3 percent to 1,410.28.

Russian credit-default swaps, which are used to insure
against the risk of sovereign default, have been the worst
performers this week among 20 emerging markets tracked by
Bloomberg, rising another 34 basis points in the period to 260
today, according to data provider CMA, which is owned by CME
Group Inc. (CME) and compiles prices quoted by dealers.

“The market is only now starting to price in the return of
top-level political risk for the first time in 12 years,”
Kingsmill Bond and Andrey Kuznetsov, analysts at Citigroup in
Moscow, wrote today in an e-mailed note. “We are likely to see
continued downward pressure on the market as those investors not
prepared for this or not willing to stomach the risk, exit the
market.”

Voting Violations

United Russia won 238 seats in the Dec. 4 election for the
450-member State Duma, the lower house of parliament, the
Central Elections Commission said today. That compares with 315
four years ago. The Communists will get 92 seats, up from 57;
Just Russia doubled its tally to 64 from 32 and the Liberal
Democratic Party won 56 seats, up from 40 in the 2007 vote. The
U.S., Germany and the European Union have criticized violations
during the vote.

Clinton on Dec. 6 cited a report by the Organization for
Security and Cooperation in Europe when discussing allegations
that the election was marred by fraud. The comments “sent a
signal” to activists, Putin said yesterday.

“People should have the opportunity to express their
opinions, that’s normal,” President Dmitry Medvedev said
yesterday in the Czech Republic. “Protests are a sign of
democracy, but all protests should be held strictly in
designated areas and strictly in accordance with Russian law.”

A map on Yandex, Russia’s largest search engine, showed the
locations of planned protests in more than 120 cities around the
country and abroad, with links to pages on social networking
site Vkontakte for details of each event.

Olga Shorina, a spokeswoman for Solidarity, said the group
wasn’t behind all of the events. The number of rallies is
probably accurate, she said in a telephone interview today.

Uneven Access

The ruling party, which lost a two-thirds majority that let
it alter the constitution unilaterally, benefited from uneven
access to state resources and the media before the vote, the
OSCE said Dec. 5. Observers also saw evidence of ballot-box
stuffing and other irregularities at the polls, it said.

“The city electoral commission doesn’t have a single
complaint,” Moscow Mayor Sergei Sobyanin, Putin’s former chief
of staff, said in an interview on Dec. 7. “Naturally, there is
some percentage of polling stations where some violations took
place. They all have to be looked into.”

Russia is continuing to improve its business climate and
the protests shouldn’t be overestimated, Dmitry Peskov, Putin’s
spokesman, said in a telephone interview today.

‘Stable and Predictable’

“I absolutely disagree with the opinion that some
demonstrations by some groups of people can impact the business
climate,” he said. “The situation is absolutely stable and
predictable.”

Medvedev’s human rights council said it was “extremely
concerned” about fraud complaints over a Dec. 4 parliamentary
poll and that the vote should be repeated if the violations were
serious enough to alter the results, according to a statement on
the panel’s website today.

Thousands of people took to Moscow streets in the two days
after the vote to protest election results. Police said they
also detained about 90 people at unsanctioned demonstrations on
Dec. 7 in the capital and St. Petersburg, Russia’s second-
largest city. About 300 people were detained in Moscow in each
of the previous two evenings.

About 2,000 servicemen and 2,000 police officers were on
duty as part of security measures that started Dec. 4, according
to Moscow police. The police press service declined to comment
today on security for tomorrow’s rally.

‘Demonstrate Our Attitude’

“We are planning a peaceful rally to demonstrate our
attitude toward dishonest elections,” Shorina said yesterday.
“We are not planning to do anything unconstitutional.”

Solidarity won approval for the greater turnout after
agreeing to move its event from Revolution Square to the smaller
Bolotnaya Square, the mayor’s office said today in a statement.
The protest is scheduled to begin at 2 p.m. and last four hours.

More than 20,000 people may turn up, Mikhail Moglov,
another spokesman for Solidarity, said yesterday. That would
make the event the biggest protest in 10 years, he added. Moscow
expects turnout of 8,000 to 10,000 people,” Deputy Mayor
Alexander Gorbenko said in a conference call with reporters.

A page on the social networking site Facebook Inc.
registered more than 35,000 people who said they would attend
tomorrow’s rally and at least 10,000 who said they may.
Organizers called on people who wanted to attend to wear white
ribbons and carry flowers or balloons.

While the demonstrations are “clearly” the biggest ever
against Putin, they are “nowhere near” the size of rallies
that toppled governments in the Middle East this year, Neil Shearing, senior emerging-market analyst at Capital Economics in
London, said yesterday in a telephone interview.

“I don’t think we will see anything like the Arab
spring,” Oreshkin said. “No one is in a rush to machine-gun
fire.”